PowerShares Launches Variable Rate Investment Grade Portfolio (VRIG)

PowerShares and Invesco Fixed Income (IFI) partner on the first and only ETF with diversified exposure to multiple fixed income asset classes consisting of high-quality variable and floating rate securities.

DOWNERS GROVE, Ill., Sept. 22, 2016 /PRNewswire/ -- Invesco PowerShares Capital Management, LLC, a leading global provider of exchange-traded funds (ETFs), announced today the launch of PowerShares Variable Rate Investment Grade Portfolio (VRIG). The ETF will be actively managed by IFI, which collectively has more than 34 years of experience in fixed income investing.

With global interest rates at historical lows due to fiscal stimulus, VRIG offers investors a fixed income alternative that may benefit from rising short term rates. Rather than trying to time when interest rates may rise, the ETF seeks to be defensively positioned for higher short term rates, providing investors with the opportunity for current income.

"With structural money market reform coming in October, we are pleased to be adding VRIG to our ETF lineup of variable rate products, said Dan Draper, Global Head of PowerShares. "Companies across the U.S. have not experienced real rate increases for years, but with Libor rising they may have to pay higher rates on their loans while new money market rules could also slow demand for short-term debt."

The addition of VRIG expands PowerShares industry leadership position with more than $6B in assets under management (AUM) in floating and variable rate ETFs.

"IFI's investment process has many potential benefits which are derived from our proprietary credit research that incorporates loan, property and borrower-level analytics as well as continuous risk management," said Tony Semak, Senior Client Portfolio Manager at Invesco. "We are pleased to be collaborating with PowerShares to bring this unique product offering to the market."

The ETF will not utilize leverage, nor will it employ derivative positions. The IFI team has a long history in Agency MBS, Non-Agency MBS, ABS, CMBS and corporate bonds. In addition, the investment team has been involved with ABS, CMBS and RMBS since the early years of those markets.

The investment team's process, rooted in quantitative research, offers a comprehensive approach to credit analytics and continuous risk management. The investment team within IFI manages a mortgage REIT, which was the first blind pool financials IPO post-financial crisis. Additionally, the team was chosen by the US Treasury Department to participate in the Public Private Investment Program (PPIP) in 2009. PPIP was a plan designed to value and remove troubled assets from the balance sheet of troubled financial institutions in the US.

VRIG will primarily invest in variable and floating rate investments, which have coupons that adjust with short term interest rates. Should short term rates increase, the variable rate coupons are designed to adjust upward and produce a higher yield. Conversely, should short rates decrease, the yield of variable rate securities will be lower. Additionally, as the result of their significantly lower durations relative to fixed rate bonds, prices of variable and floating rate bonds have generally fared better in rising rate environments.

VRIG also has the ability to predominantly invest in flight-to-quality assets such as US Treasuries and other government debt should the residential or commercial credit cycle turn or global market liquidity become impaired.

About Invesco PowerShares Capital Management LLC and Invesco, Ltd.Invesco PowerShares Capital Management LLC is leading the Intelligent ETF Revolution® through its family of 140 domestic and international exchange-traded funds, which seek to outperform traditional benchmark indexes while providing advisors and investors access to an innovative array of focused investment opportunities. With U.S. franchise assets over $96 billion as of June 30, 2016. PowerShares ETFs trade on both US stock exchanges. For more information, please visit us at invescopowershares.com or follow us on Twitter @PowerShares.

Invesco Ltd. is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at www.invesco.com.

Correlation is the degree to which two investments have historically moved in relation to each other.

Duration is a measure of the sensitivity of the price of a fixed-income investment to a change in interest rates.

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